Next year will be one of the most significant in the history of the South African telecoms market — possibly on par with 1994 when the two initial mobile operators surfaced. And it can’t get here fast enough.
So, what are we in for (I think)?
Let’s start with Telkom. It’s fairly widely known that Telkom is in talks that will result in radical changes. The fixed-line business will be acquired by MTN, and its stake in Vodacom will be sold to Vodafone. MTN will then be able to use Telkom’s fixed-line expertise to service enterprise customers in South Africa (instead of having to relay its own infrastructure), and probably more importantly, to build out better infrastructure in Africa.
I’ve seen a number of “Fibre access in eight weeks” billboards around Sandton, so these are the first signs of life after the much-discussed fibre “pipe” that MTN has laid between Rosebank and Sandton.
There is also the option to start aggressively pushing MTN’s products to the Telkom fixed-line base. The glaring omission is MTN’s content and media strategy. It may well have chosen not to go there, but with Vodacom and Telkom moving aggressively into that space, I wonder what MTN’s response will be? HCI/e.tv, Primedia, Kagiso, anyone, want to be a little yellow? Maybe not.
Standard Bank’s deal with the Industrial and Commercial Bank of China is a sign that the Chinese want to do more in Africa. There have been rumours about China Mobile being interested in MTN. That would be a colossal mobile and fixed-line operation in Africa, the Middle East and Asia. Stranger things have happened. And their colour is yellow.
Telkom Media will probably remain an independent entity. If it didn’t and MTN went for the quad-play of mobile, fixed-line, broadband and broadcast television services, it will have been an interesting journey — born from within MultiChoice (MIH/Naspers) and ending up potentially being its biggest direct competitor.
Vodacom will list separately from Telkom and be free to challenge MTN head-on in Africa once the shareholding favours Vodafone. Access to Vodafone’s infrastructure, balance sheet and content will make it stronger than being restricted by the Telkom shareholding.
This leaves Vodacom to launch Vodacom Media — an entertainment, content (mobile radio and TV) and advertising play that is built to use the broadband capacity in Vodacom’s 3G/HSDPA network. We may even see closer ties between Vodacom and MultiChoice/Naspers. They have content distribution deals as well as retail-package distribution deals. It seems that they have a stronger relationship than MTN does with MultiChoice. Anyway, MTN may be in the same playpen as Telkom Media.
Enter iBurst. Vodacom already has a 25,1% stake in iBurst. There is already joint marketing, and iBurst has definitely benefited from Vodacom’s involvement — its marketing, distribution channel and technical resources (especially in the SMTP department) have made iBurst a contender as a “dial-up” replacement. The jewel in iBurst’s crown is its WiMAX license. This goes nicely into having high-speed, pervasive connectivity that the likes of Vodacom Media will want. Will iBurst/WBS end up being swallowed entirely by Vodacom in an equity deal for Blue Label Investments at the time of the Vodacom listing? Time will tell.
Neotel already has enterprise customers and is surely to launch its consumer offering in 2008. This will be a serious contender for consumers and small businesses that have given up on Telkom installation delays, as well as those who will move to Neotel on principle. There are already Neotel fan groups on Facebook. The demand is there; now for the delivery.
A key project for Neotel will be its involvement in Seacom, the new undersea cable on Africa’s eastern seaboard that they will manage in South Africa. An aside — it’s landing at Mtunzini in KwaZulu-Natal. I am from Zululand, and know that this will be Mtunzini’s crowning glory! Move over, sugar barons, here come the nerds.
I have changed my thoughts about Cell C and its “broadband strategy”. It has stated that it will not compete in the 3G/HSDPA space, but will stick to Edge (enhanced data over GSM). Initially I thought this was suicidal. However, it may just be what the majority of South Africa needs. By providing a high-quality network (with a steady 100kb throughput), and by getting really inexpensive Edge modems into the country, its data offering can service users that need email and basic internet access. The 3G/HSDPA tub-thumping, entertainment-rich, high-speed connectivity may just be overkill for many.
To illustrate the point. I was in rural Mpumalanga recently and needed to do some work on my laptop. I have SIM cards from each of the networks. The only one that gave a decent signal and allowed decent (stable and steady) throughput was Cell C’s Edge network. Suddenly high-speed broadband wasn’t so clever any more.
As I’ve stated before, I think that the MyWireless customer base will be sold to someone. If not Sentech as a whole (MTN may want Sentech’s WiMAX licence), then something has got to give when considering MyWireless. It was first to market, but certainly didn’t take advantage of that position. Not sure I know anyone that uses it any more.
On the device side, iPhone version two and the 3G version will come as a welcome improvement. But more importantly, the Android platform from Google and its Open Handset Alliance will appear (on phones) in the middle of 2008. As a new mobile OS, it is sure to challenge Symbian et al.
While we are talking about Google — it has arrived in South Africa and is making all the right noises about lobbying for more, better, cheaper broadband access. Go Google.
All in all — we will get more choice, better handsets, more throughput, better coverage and, hopefully, lower prices. It has to be a great year.
Remember, this is conjecture and a little guess work. So don’t quote me.